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tv   Mad Money  CNBC  August 16, 2013 6:00pm-7:01pm EDT

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. >> my mission is simple, to make you money. i'm here to level the playing feel for all investors. there's always's bull market somewhere and i promise to help you find it. "mad money" starts now! hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends, i'm trying to save you money. call me. 1-800-743-cnbc. up down, flat day, there is something you need to understand. investing can be a lot like comedy in both disciplines,
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timing is everything. people call me a clown or a joker, as long as it's not a midnight toker. maybe their actually complementing my key sense of timing when they compare me to these investing ledge end, bozo, crusty, anyway, it's on them. knowing the right moment to buy tore right moment to sell, among the most important, yet difficult and frustrating part of managing your own money, you tell me so many times when i see you, i am solving it tonight, precision is demanding. that's why you hear so many commentators say it's impossible to time the market. there is a whole cottage industry of naysayers who make a living telling you that will is simply no way a regular investor can do it. so you might as well give up on trying to trailed, give up on picking your own stocks and just put all your money in index as a market as a whole and leave it there for eternity.
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i got nothing for index per se. it can be a decent way to make money in the market if you don't have the money to manage the portfolio and many people don't. i have been saying that since the show began. but the argument that's the only way to go, that's totally bogus. because we all have either made good money buying individual stocks or know people who have or you would not be watching a show devoted to trying to help you invest yourself. yet, that success is systematically denied if not den graded by those for this brain dead form of inversing. even with index timing is crucial. if you bought in the peak of 2007, s&p was trading at 1,500ths. you got annihilated. if you bought in 2009 when the s&p traded at 7:00, how important is timing? with the s&p at the top of twoinks you end up losing half your money, eventually you made a decent chunk back. that can take ages to recover
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from. of course, what the dow jones average before europe rule the roost back in april, 2011 and panicked at the twilight of summer 2011, you saw 20% of your capital erased. admitted, these are all extreme examples. they've happened enough to be considered regular occurrences, don't you think? they certainly get my point across. timing is everything if you want to make money. last i looked, that is a very worthwhile objective, not trumped by the demand that you go to an index fun. fortunately, timing or how to better timep investments is something that can be taught. that's what i do. so, it is my mission in life to make you a better investor. you know that, or at least a better client or full broker, which i also like. i'm going to teach you to do a better job of timing your moves by ab sork crucial lessons i picked up in over three decades of trading. let's get right to it. one of the reasons time in the market is so tough, the moments
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of greatest opportunity, you should be putting money to work, switching from bond to stocks are often also the moments of the greatest terror and angst. they tend to be the exact hours or minutes when everyone is telling to you get out, sell, sell, sell, an all your instinct are screaming that you should panic. ahh! i understand your concern, it's a heck of a lot easier saying i would sell here, than to say, no, or wait a second, it's time to buy. for the one's going to remember you as a cure all if the market goes back up. you will always business regarded as a go, especially now that twitter and youtube can keep anything live in context or out of it. can you say sell, people don't realize the rest of the sentence was, if you are up and you got a triple and i think maybe you should go, more important the most frightenning moments, if days you were drooek freaking out, those days are almost never the right time to sell.
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there will come a better time. the time where the market lifts a bit. if you want to dump stocks. why not try this strategy for change. i am serious. just reverse all your thinking. pick something to buy, not sell. do it small. you don't have to be wrong. you also don't have to break down the doors on the way out. remember nobody made a dime panicking, it is a strategy that one can call panicing or strategy. let me put it another way for you. often, because you don't like a market, it doesn't necessarily mean it's the right move to sell. only once in my 20-price career is it to sell while others are panicing left and right, every single other time, someone was wrong, someone was right. whether it be the sell-off, remember the sequestration scare and u.s. bond downgrade, oh, scary t. jet ceiling debacle. take a look. the market got clobbered then. the '87 crash. yes, i'm that old. 9-11, for that matter, panic has
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been not smart. in all those cases, what was broke was buying, in many cases it worked big. the only time the panic made sen was to sell in 2008, because the financial system was, indeed, on the brink of collapse. that's when you had to take it off the table. that was the systemic crisis, people, not a systemic crisis. so panic made plenty of sense, which is why i told you to sell. then i went on "the today show" back in october of 2008. >> what is your advice today? >> okay okay. whatever money you may need for the next five years, please, take it out of the stockmarket right now. >> yep. when the whole system was in jeopardy, the only time since the great depression, buying actually hurt you, stocks just kept falling and falk. it was a good call. so you never got a chance to unload the merchandise you bought on the dip at a higher price. is the only time. one instance, once in eight years. i don't expect that to repeat itself.
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look, i know this rule, in october of 2008 i was heavily criticized for what i said, teletelling people it's a sell-off. my response was that it was truly burning. you needed to get some people out, even those know others might not be able to make it. in 2008 and 2008 only, quick, almost immediate selling whats the right move t. thee turer was on fire. almost at a straight line. it was sma rt to sell even when we were already several hundred points fou down. getting back if was tough. you manage to side step the decline of more than 35% when you took action when e when i told you to get out now. it was good to heed the 45% decline thavlgs done in a less dire moment. they are among the proudest hours i have had in my many years at "mad money," they have forgotten the vast day-to-day investing. i get that. maybe that's good, because that kind of selling is not an appropriate take away unless the whole system is in jeopardy and as i tick down all these
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proximate causes in the last three years, can you tell, they ended up being moments to buy, not sell. yet every another time, every other crash or correction or sell-off, you either could afford to wait or you should have bought into the panic. how about the timing within the sell-off? day one of a vicious declierng hold your horses, please, stand pat. be patient. remember the markets can be vis rated until we climb 5 to 7 parts from the highest. 5 to 7%. that's where i like to start doing some buying. that's been my rule of thumb. historically, it's been a prudent place to begin your purchases. what happens if you go the other way after a kind of decline? believe me, i see what happened when you panic and get it wrong. long term capital was collapsed, letening to bring down the several other discussions with it. i wrote a column for the online public indication i had found on the street.com. it was titled "get out now."
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i always remember that "get out now." it was advising people to sell. the fed didn't understand the gravity of the moment, systemic risk. what happened? within one hour of that piece, the fed held an emergency meeting to cut rates and the market rallied light i right back in my face. it was a terrible moment for my old hedge fund, magnified by the time stamped article. it's a moment i wrote about in "confessions of a street addict" it was a cautionary exercise in panicking. in 1998, i was dead wrong. go read it. people pen about that chapter jim kramer on twitter and the lessons learned from it. if you took the other side of my fortunes, i'm putting out to say it happens. i radically reversed my stance the same day, in fact, it was too l.a. i had to pay up huge for the same stocks i sold in the morning. i feel the scrambledics from that call. here's the bottom line. do not sell in the midst of an awful decline, no matter how much you might want to.
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that's bad timing. keep your head, you will get a better moment to sell. in all my years of trading, panic has been a response to huge selling once, systemic problems. every other time the right move was to buy into weakness, so remember that and my story about getting it wrong the next time we get a horrible pullback, believe me, it will not be systemic like it was in 2008. now, i go to paul in california, please, paul. >> yes, jim, this is paul from rancho santa margarita, california. first of all, i just want to thank you very much for every -- all your help and research. >> thank you. >> caller: you've really helped my family. i appreciate it. >> thank you. >> caller: you always say to use limit order tz. >> right. >> caller: but if i have been watching a stock and tracking it constantly and it finally hits the buy price that i want, wouldn't it be smart for me to use the market order if i feel it's gone down or do you think i should wait for a little order price? >> you have to wait.
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let me tell you why. because some of the big declines we've had have been so fast and breath taking that you will get a report that you bought a stock at 20 and the stock will be at 15, because the machines went amuck. until the government rules in all this financial engineering that caused this quick downturns has to be banned. i can't count on that kind of order. let's go to mark in florida remembers please, mark. >> hey, jim, thank you, boo-yah to you. thank you to you and your crew, they are all so fantastic. >> they are good. they are good. >> jim, my call today is on options. i hear all the time on cnbc an sometimes even on your show that options for a particular stock are expensive right now or they're reasonably priced right now. how would i know when options are reasonably priced or expensive? i'm an action alert subscriber. i read all your box. i really don't remember this being discussed. >> okay. that's right. i addressed it in real money and addressed it a little bit in
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getting back even. it's a great question. thank you for subscribing to my charitable trust publication. what i like to do is look how many points over, you take the option, you look at what is known as the premium, how much it is over, if you just backed out the price of the stock and then if it's very high and at the expiration of the put or the call is happening in a very near short of time, you know it's expensive. you have to measure the premium. the premium can be too big. that's when you have to avoid it. you heard it before, timing is everything, it's especially true when it comes to investing. in the face of a sell-off, please, please, no panic. time is on your side, take a breath, relax. keep your head and maybe buy. time is money. i got a lot more coming up. ♪ >> stay with us. >> don't miss a second of "mad money." follow at jim cramer often twitter. have a question, tweet cramer,
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hashtag mad tweets. send jim an e-mail at "mad money"@cnbc.com or give us a call at 1-800-743-cnbc. miss something? head to "mad money."cnbc.com. a-a-a.
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. >> when to buy? when to sell? it's all about time. that's right, you could have the best stock picks in the world, it wouldn't mean a thing for your portfolio if you didn't have a sense of timing. i am a believer that non-professionals can manage the money, sometimes pros even better. that's why i come out to teach. you may have heard from the naysayers, intelligencia, it's possible to beat the market and outperform the benchmarks, that's like the s&p 500, as long as you know what you are doing and think like a disciplined investor rather than a gambler. if you are devoted and inclined to learn about stocks, my experience is that you will most likely beat many money managers and you will be able to take taxable gains and losses when
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they suit you, not the manager, a very important issue concerning the importance of taxes and long-term performance. right? a huge part of knowing what you are doing is having decent timing or knowing enough to make, not to make boneheaded mistakes about when to buy and sell. that's why tonight i'm going over the most frequent errors investors can make. it's easy not to make mistakes when everything is going away him when the mark turns south, when everything looks like it's turning apart, when the braesh is on, that's when people tend to screw up. for example, let's say your portfolio has your pants down, many of you are caught ern owning too much stock, something pros call having too much exposure? i have been there. it's horrible. the worst part is not knowing what to do, whether you should blow out of your stocks or hold tight. you know what else is extremely dang ris in a struggling market? the propensity to take sweeping
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drastic action all at once. when it seems like everything is going wrong, when you know the economy and the market are getting worse, you are dead certain nothing good can happen. here's my advice. take a breath. hold it. don't do anything crazy. i would say meditate and do yoga. i am one of those down dogs who roommates about how bad things are, instead of concentrating on breathing. i'm concentrating on how horrible things are. what's crazy? selling everything is crazy, even if you owned too much stock and you wanted to lighten up, you have resist the urge to sell everything. that's bad timing. i always tell you never to buy or sell all at once, it's pure arrogance, my rule is that you should buy and sell by increments, if a stock you bought goes down, you can buy it at a price, can you sell more to take advantage of the price rather than feeling like a church. rule applies to more than individual stocks, it applys to your whole portfolio. you should never sell everything all at once. what's the right move?
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here is your crisis playbook, moments when the fundamentals are deteriorating in front of you and you generally want to get out. first you have to sell something, not everything is equally good. here's my rule for what can be sold in a pullback. got store, don't give them back. that's when you have to remember this sound, you have something where the fundamental apples have changed, the story is going against it. blow out of that stock, people. you have something that you think is going lower in the short term, you know what sell, sell, sell, sell a little, please. do it. sits in el it. that's fine. you can buy it back lower. do not sell at all. that is just plain stupid. don't ever blow out of everything. don't give up on stocks xier i entirely and hide in treasury bonds or cds is punty yields. instead, when things look dire, get ready to dede ploy your capital that are selling off. use that money to buy something you really like. this is why not in the heat of
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battle in the calm at the end of the week, i rate all my stocks and my charitable trust. you can follow along from 1 to 4, the 1s the best, 4s the worst. i swear this rating system will help you. i pioneered it. it is on display on every bull ten we send out every day. it is the best way to handle a sell-off. it is a proven game plan i have used for three decades. it has never steered me wrong. the 1s, what are they? they're the top flight stocks. they're the names you boy more of in moments of pure chaos. you have been ready. you have done the work. you know they are ripe for the occasion. the 4s are the expendables that you sell when things turn awful. you just don't get emotionally attached. you don't. they'll get it back. the 3s, stocks you wish were higher before you sell them, they can be sacrificed if you need to raise cash for your 1s. don't wait for them to get back to even if something is likely to go up a lot quicker during the same period of time. the 2s, they are the highs
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before i pull the trigger. why not sell it all when it seems like the market is turning against you. why not? american stores. it's the old acme, my favorite supermarket when i was growing up. i had owned them in 1990s with my old hedge fund, betting that one day it will be taken over, that it was worth so much more than it was selling for, time will be on my side. then we got a brutal sell-off. i couldn't sand the pain. i got goldman sachs. i picked them up in the phone, i said, "buy my whole book." they stopped me down from 2%, they agreed i would get the proceeds down 2%, no more than that. you could do that then. you could literally offer everything you had and they would buy it on the line. included in that package i sold the stores. it was so ugly, i didn't want to own anything, including a stock
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i owned forever. a big institutional trader i was could get a huge firm like goldman sachs to buy it as a discount, knowing you could crush your stocks and do damage by going at it piecemeal, it was what i to the was a prudent decision. two weeks later, two weeks later, after i had sold all my position, albertson's bought american stores. it was a huge premium. gigantic. i couldn't believe it. i had held on to american stores for all these years. like a church i sold it because i couldn't take the pain. if i had added the position, i could have blown it out and made my year. i always remembered that moment, it caused many tow rethink blowing out, it took all my stocks down 2%, you know what, the stockmarket bottomed out 2%. i didn't have the guts to go back in at the time because i was so adamant we were going down 4 to 5%. what's the moral? selling something wasn't a bad
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idea. the pain sometimes becomes too unbearable. i know that within are you all in. meaning you have little to no cash on the sidelines, selling everything, massive mistake. it's always good to use a top notch futures led 500 seller to pick at. not load off, pick at your 1s, your favorite stak stocks and they always end at some point. not all of your stocks will bottom at the same. if you rank them, you probably won't care the best ones will get put on sale along with all the other merchandise, the good with the bad, the we've of the chat and the draws for that matter. selling everything, getting out all at the same time, that doesn't leave room for the possibly that things can and they might get better and quickly. it doesn't leave room for the next american stores. it takes you out of the stocks you have been waiting on, being patient. it's awful timing. the time warps feelings ability stocks. so never trade like it's the apom lips, never sell everything all at once. instead, go to the supermarket of stocks. buy out what you want to buy on
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weakness, remember, i checked out of the most important stock i liked in my zeal, to get into that ten items or less line and to because of my haste, my wearishness, i missed the huge american store's buyout and the stock rally that followed soon after i left the store. do not repeat my mistake. after the brake, i'll try to save you more money. don't let your money take a vacation this summer. all next week, "mad money" is heating things up, finding the markets hot as steam, cookouts with cramer. it all starts monday. >> what is the possible justification for apple sitting on $137 billion of cash? >> it is a sociofinancial inflexion point. apple is now just a stock. >> is there a strategy chip you should be expected? >> managing inventory levels, i think that will be the case. >> a close above here they say
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could be a technical breakout to the upside for natural pass the. >> what do you recommend for people here? should they get involved in the sector broadly? >> it's the networki names i'd e wlking at here. borrow better banking sign. nope for real there's two dudes on the state farm borrow better banking sign. [ reporter ] breaking news from the state farm borrow better banking sign... we're seeing two men that have climbed the borrow better banking sign gentlemen please get down from the state farm borrow better banking sign. phil get the hose. okay he's getting the hose. alright, let's go. [ male announcer ] talk to a state farm agent about car loans that can save you hundreds. that's borrowing better. and this is my home team. this is my large lecture hall. this is my professor. and also my coach. this is my booster club. this is the guy who's graduating ready for a great career in technology. [ male announcer ] in 2012, 90% of devry university grads actively seeking employment had careers in their field
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. >> my apologies to the great cramer king. it's never too late to know what you own. knowing is more important than never knowing. we live in a world people didn't meet a disaster they didn't like. if there is a negative story, you can bet the press will go into total disaster mode, hurricane disaster like, day after day the more sensationalistic and frightenning, unfortunately the better. not everyone is kind of addicted to it. it's a fact of life, every geopolitical issue. every weather issue. every crime and punishment fans complaints of panic. everything is traded as a huge and equal task, the jen when
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task treated like the end of the world like it's apocalypse now. take it as a given, every negative story will be exaggerated to make it seem as it's the end of the world as we know it or on the eve of destruction. how about mcguire targeting the older demographic, older than carole king. we have to accept this overreaction is a part of the change in the way the business media and market, all media, sports media, you can't shake. it's almost like they want to shake you out. they want to shake you out of just about anything you want to own or might want to buy. at times we seem to be unable to steer ourselves against the glue machine, instead, view our own thoughts with unlimited pessimism over all outcomes. houmont have we seen this happen? think about it. the market sold off based on instability, egypt and civil war in libya, cypress, tragic earthquake and tsunami in japan prompted a full nuclear crisis the sovereign debt crisis in europe i think now unfirstfully is over. what should you do during these
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types of scares? what's the right way to react to this kind of crisis? i think these terrific non-systemic risks, meaning the bank in the u.s. is not about to go under. these moments can make terrific buying opportunities in the right stocks. you got to get it in your head, how? okay. let's figure this out "mad money" style, using the method that i would employ at my hedge fund that i no longer work at and retired from. it drove down the stock futures. remember, chicago futures they locked down new york stock also. first we had to put the event in the perspective, okay. the news is potentially tragic. it almost always is. you can't ever make upon the u fun of it. it's not something you make light of. what effect does it have on the numbers? what about the numbers in cramerica? let me give you an example. in the 20 years i invested in other people's money, i use what i call the bristol-myers theory. the company i felt always had the most consistent earnings
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imaginable. nothing is changed. at the hedge fund, we had board meetings at 6:00 a.m. what was the point? get the heck out. we might as well go home. since the opportunity to make money has passed. i sent you home if you were a minute late. they were lucky if i didn't throw water bottles at their backs. i did throw. i hit the guy. every time we got rid of noes those nasty events at the morning meeting, somebody would say what are we going to do now? iraq invaded kuwait? what do we do, jim what do we do? first off, i'd say, calm your mommy. then i would scream back driping with sarcasm and arrogance, what the heck does that have to do with the place to earnings ratio on bristol-myers? of course, the answer is nothing. the first thing i always did when i heard or saw a big scary event was to make an equivalent to bristol-myers him they wouldn't be hurt even if it turned out to be worse tan expected. at times it can seem like we have a terrifying new crisis
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every other week. you need to develop your own bristol meyers names. maybe it's a high yielding food stock. maybe it's verizon, another steady eddie company with a big dividend, southern duke, i don't know, be ready. find something you like and get ready to buy during a market-wide sell-off that won't hurt the earnings of verizon, pin cam, southern or duke at general mills, for instance, step two, ask yourself, is this the event? is it bad for all the earnings out there? for example, when the egyptians were demonstrating the streets in early 2011 and demonstrateing again, trying to kick out a dictator, there was a moment when even the oil stocks, which benefitted from higher oil prices got knocked down along with everything else. doesn't that make no sense whatsoever? that was tremendous buying opportunity. if you bought the oils, that's what you had to do. same with the overthrow of the elective but dyslexic egyptian leader in 2013. egypt gives us a lot of
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selloffs. what does this mean? it means when oil comes down because of unrest, if it's in an area that threatens the oil price to go higher, you got to act. you schto buy. i'm sorry, there is some big scary crisis somewhere on the globe, like the sequesters an debt ceiling, unrest in brrksz unrest in egypt. i need you to remember the bristol-myers theory, what does shhave to do with my stock? put it in perspective, maybe you feel you buy an area that's an opportunity brought down by the particular event. the bottom line, there will never be a shortage of terrifying events to bring down the whole market. the next time it happens, don't run away. there might actually be an opportunity for to you make a very, very big profit. vince in maine. vince. >> yes, thank you, professor cramer for all you do for us. a quick question on what makes stocks split and what do we do
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when they do? >> this is such an interesting question, people always get it wrong. it's up to the ceo and the board. there is no rule. some companies go, look at berkshire hathaway, up 150,000, 100,000. it's up to warren buffet. companies have to decide whether they think it makes their stock more attractive to individuals or does it make it more attractive to hedge funds, which they typically don't want. i am in favor of stocks because so many of our viewers don't want to buy stocks in the high dollar amount even as i know the truth, which is if you take a pencil and you snap it in half, you don't have two long pencils. this is the same thing. it's cosmetic. but in this market, it's working. patrick in arizona, please, patrick. >> hi, jim. we had a stock that's had a good run, we, of course, take some off the table. >> right. >> but if it's one of our stocks we like long term, what is the plan to get back in when there are no pullbacks?
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>> well, you know, i got an answer to patrick you are not going to like. happens, you missed it. one of the great things about this market is. >> all aboard. >> there is another train coming to the station. when that happens, you missed it. it's one of the things people don't want to do, anybody, is to say, you know what, i missed that one or i blew it. sometimes you got to own it. charitable trust, i say, we can't buy that one back. it moved too far. that's what happens, you got to wait. john in new york, john. >> caller: jim, good evening. this is john from new york. i have a quick question for you. i own a stock. i made some money with it. i'm looking to take my money and put it into something else. is it best to take one stock with that money or two good stocks with that money? >> it depends on how much time you have. >> caller: split it. >> it depends on how much time you have, i try to say over and over again, if you have no time at all you should just be in a mutual fund. look, there is a lot of good
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managers that come on to cnbc. if you have time, do one stock. if you have a couple hours a week, you can do a whole bunch. if you don't have time to monitor it. look at it as quickly as possible a. good investor know what is she owns period. it's more important than ever in this crazy world. the hyperconnected kraerksz disasterous world, when something happens, i don't want you to be panicked. it could end up being a buying opportunity. >> keep up with cramer all day long. follow at jim cramer on twitter and tweet your questions hashtag mad suite tweets. [ male announcer ] i've seen incredible things. otherworldly things. but there are some things i've never seen before.
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. >> time after time, timing is everything. a stitch in time saves 9. whatever you say, whatever trick, remember this, i amtime teaching you timing your buys and sells can and should be done. those who say it is impossible, they simply want to keep you in your collective chains. consider me a bolt cutter, setting you free. i want to talk to you now about a particular kind of chain you
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need to be out of battle from. i like ipos. it's been an amazing period of time. we've had so many great ipos. we do our best to try to analyze them for you on "mad money." they are not easy to do. so many teams you call me and ask, jim, is xpo a good one? i have to say, it depends on where they bring the deal. jibberish for the amount of shares offered. let's say xyz is becoming public. the bankers are talking about bringing the dell to 20. $20 price times 50 million shares. but the bankers can do a lot of different things. insider own both, venture capitalists who help fund it might own a lot. whoever seeded the company will have a substantial amount of shares left. secondly the ipo price they are talking about. may be what's called the price talk, meaning what the initial price they are thinking about bringing the company at, not the last price. if demand accelerates, you are
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going to hear the price move up, maybe to 25, maybe to 30. obviously that puts it at a rich level. i may not like it at 306789 i may tell you i like it at 20 and think it's trading. think it's a sale at 30. accept it for an ipo, too, please, some stocks do get too expensive. later on a third variable thebanks bankers they want it to pop, they want to generate a hot deal, with town immediately goes to prem upafter it opens. they can hold back stock. let's say xyz has 50 million shares, getting what is known indications of interest. they might send some other company with 50 million shares has a demand of 10 million to be sold, that offering includes a price of $20 million a share. the stock will wal low. the opposite is true if they cut back the shares. bankers are experienced. these syndicate managers as they know how to figure out how to make a stock pop and how much they want, simply by severely cutting back number of shares
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they offer. they say we got a demand for 20. they have 5 million shares. only one-tenth of the shares demanding. cut back will generate real excitement in the number of shares they are given. that's what makes for a hot deal f. bankers have demand for 10 million shares and issue 5 million, everyone will cut back who wants the stock. it will be wildly oversob described, what we're hoping for. people, is how hot doles are made. i happen to call these kind of offerings sliver offerings for the days that we brought public the street.com. they did a sliver, a sliver of it. sold a lot in the social media craze. they create a wild pop, bankers choose to make it hot, or perhaps to eciate excitement. obviously, if they offer a lot more stock on the deal, there will be a risk it won't hold, it will go below where they price
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the deal. in ug is worse than what is known as a broken yield. with under that immediately goes below the offering price. it hurts shareholders and the company, better offer a sliver, get people excited. all juiced up. six months down the road when what is known as the lock-up expires, hopefully the stock will be well above where it is priced. insiders who choose to sell will get out at a big profit. i don't care about the insiders. i care about you. i want you in on sliver deals, anywhere where it owns 10% of the company, i want you in for. so let's take groupon the online social media company. i'm not a fan of this kind of company in general even though this company improved dramatically overtime with new management whom i happen to like very much. i know they can and have done great things for retailers. my groupon offering, i don't want to go 10 miles out of my way, save money, a slice of pizza. brazilian waxing. groupon, the ipo, hey, let me
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in. there are 640 million shares. sliver of an offering almost assured demand would exceed supply. 20 and trade it to 30. the company raised 7 million and received a giant allocation. needless to say, they only made out like bandits if you sold, well, if you sold, when the selling was good, you made out terrifically. that was the first day of tradening. how about the buyers in what is known as the after market. the price of the stock up once it actually started trading. if you bought it at 28 where it opened, you didn't have that much room, did you? after that groupon began an ugly slug down, one that was impossible to reverse until the board finally saw fit to relieve the errant ceo. it's been good. it's been a buy ever since. well, what was the right thing to do? follow steve miller's famous eat it and take the money and run. you can fly like an eagle. ring the register when it opens. the brokers don't like to encourage what is known as
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flipping, which is putting in for hot deal, bang out when the stock deal trades, i'm not the broker. they may not condone the practice. i say why not? you do feed business. you put in for a sliver deal, which is designed to pop. why can't you take the pop? unshackle yourself. stliems is only two decisions to make, put in for a deliver i sliver deal. you time that sell, please, don't stick around for one red hot minute longer and never, never, never buy in the after market. the vast majority of the time, buy in the after market on a sliver deal is for suckers. be smart. take the money and run. stick with cramer. le announcer . time to have new experiences with a familiar keyboard. to update our status without opening an app. to have all our messages in one place. to browse... and share... faster than ever. ♪ it's time to do everything better than before.
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for the strong and the elegant. for the authentic. for at home and on the go. for pessimists and optimists. for those who love you a little and those who love you a lot. for ultimate flavor and great refreshment with or without calories. for carefree enjoyment. for those who have a lot to say and those who have nothing to add. for those who want to choose and choose. for every generation. for us. for everyone. forever.
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. >> not every stock can be owned forever, period, no, there are very few stocks that you should own all the time. year after year, decade of decade. the fact is, if you don't know what would make you sell a stock, then it's nom not okay for you to buy that stock. lots of people end up selling at the wrong time, they never anticipated selling at all.
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they figured that's never going to happen. they only thought about what they wanted to buy. they didn't have what i call an exit strategy. as your investing congress i need you to make sure you don't make that same mistake. i need you to develop exit strategies for your stock. how do you time yourselves? okay. there are many stocks where you, when you buy them, you need to understand some day, possibly some day soon you will have to sell, for example, high flying tech stocks. they're like they can be obsolete almost immediately. it's simply not safe to own them unless you recognize they can't be owned forever. eventually, you need to ring the register and take the profits when you have them, before they slip away. that's why warren buffet never owns the smoke stack. they make money when the economy is healthy t. so-called cyclicals. they're hostage. they sell sunday, the first real sign of a slowdown, association you can't rite ride satellite a. lot of this comes down to understanding. tech stocks not just the same as
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pepsico, the first of these tech names are trading vehicles that can fly and crash t. second half of the pepsicos thatry staples and can trade forever. a trading vehicle can make you a lot of money, not a lot of time. you have to take it off the table every now and then, if you let it ride, that vehicle will eventually crash, dropping 10, 20, 40, 50% in a matter of day, hours even, a tame like altria will last long term, management can still mess up. the business can underperform. of course, we will find out about that ahead, we will sell it. it's very unlikely the stock will fall off a clip. in other words, when it comes to changing vehicles, you have to sell when it's time to sell. tech stocks are winners when a cycle is strong, smartphones, thatlet computers. some companies find smartphones can make you a lot of money when
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times are good. you got to believe it can get you annihilated when business isn't hot. the only exception here is if there is no cycle. no hershey bar cycle. we don't talk about people using more kellogg's frosted flakes in the spring. there is no seasonality. is not the kiels. take the dot-com run, it was so fantastic. i got to tell you, you had to catch it. if you bought at any time up to the lost two months and sold it, you would have made a for churngs perhaps the most ever. back then, you had to buy the parts and the equipment makers, big, small, independent were expanding. they had all this money from the stockmarket. until the demand fell apart, keep anything these stocks. if you didn't sell, you were blown out. you had to buy and sell. i tried to teach that you you have to change your view when the facts change, at jim kramer on twitter, it is the case. i don't want you to end up like the victims in the dot-com bond.
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the people refused to sell and got wiped out. sometimes that means selling something even though you bought it at a higher price, another thing people hate to do t. facts have changed. the business has gotten weaker. you don't make money on every single trade or investment. all you want to do is live to play again. often the shooting star tech stocks will get hammered after the first science things i things are deteriorating. it's not. they can go lower. use any day strength tolighten up, come on. your first loss is your best loss, stay investing in the same world, i was reading the other day, boy is that every pert meant to what i'm talking about. discipline makes a huge difference. i am tireless in telling you not took grody, saying you have to take something off the table, i endlessly tell you it doesn't matter where a stock has been. when it goes down, down, down, when that happens, sorry, you have osell the darn thing. if you love it, you can buy it back lower when interests
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emprovebling, not deteriorating. do ep treat risky trading vehicles like shooting star tech stocks as though they're staples that can be held for ages. there are third rail names. take caution. you can do very well for yourself. take profits on the way up. get out of the way down. you don't have to go over the top to make money in these names. have you to be willing to jump ship. when it's clear the stock is peaked and the business and you are ready to head down, stay with cramer. .
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>> we set if the action. hear we go. the first tweeter says i'm trying to buy a small regional bank with no buying with limited order, getting in on low buy no stocks, don't do them unless you buy ten shares or maybe 100 shares. why? because i talked about an exit strategy. it's difficult to get out of those. with 100 shares, yes, you can put a limited order, of course. nothing bigger if there is no real mark. it's not for you. and now to the blood diamond, who write, when you are not on "squawk" on the treat, mad money or twitter, live i life isn't the same. i am hashtag addicted to jim cramer i am hashtag addicted to taking a vacation. you should see me at the shock, i am more recharged. hash tack. chartnado. chartnado. our next tweet comes from an
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earlybird show. this one says, following, can you talk about the preferred stockmarket? preferreds are another form of capitalist corporate bonds, preferreds, they're stocks. i like the preferreds in getting back even, i talk about bank preferreds. i think that's the best place the best thing i had preferreds. matthew feltne rer says how much do you sleep a night? what keeps you up all night? unfortunately, i have a sleep disorder. i have two or three months a night i don't go to sleep. most nights i go to bed at 11:30 or 12:00 and get up at 3:30 or 4:00. now, hashtag charitable jim, would you explain how a contraryian will buy stock on a pullback? thanks for all you do. i am going to refer you to bob langstuff in real money.com. he knows it better than anyone.
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i like to say, "stick with cramer." (announcer) scottrade knows our clients trade and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help. because they know i don't trade like everybody. i trade like me. i'm with scottrade.
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. >> chartnado. i like to say the dow finishes its worst week of the year but the past five days have been filled with growing concerns over more than just stocks. interest rates soared. corporate profits are sluggish. even the housing market seems to be cooling off. dark clouds definitely seem to be rolling in at this point. then there's egypt. growing violence in cairo and other cities. have investors and non-investors alike asking the same two burning questions tonight, has the united states completely lost its influence in to the egyptian government. all those stories and

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